Recent Western Cape Business News

LAST month saw the surprise advisory that Parow-based diamond miner Trans Hex was in discussions to considerably enhance its local mining sphere with industry giant De Beers Consolidated Mines.

No details have been given at this stage, but a terse notice to shareholders from Trans Hex indicated that the company had entered into exclusive discussions around ‘exploring options regarding the mining and processing operations conducted by De Beers’ Namaqualand Mines Division.’

This may well be the kicker Trans Hex needs to change its fortunes, which have dwindled markedly over the last few years as its Angolan operations took longer to come on stream with earnings from its traditional Northern Cape operations shrinking markedly.

The Namaqualand mines, which have been in operation for over eighty years, comprise the Koingnaas Complex (between Mitchell’s and Somnaas bays), the Buffels Inland Complex (on terraces of the Buffels River inland of Kleinzee) and the Buffels Marine Complex on the raised beaches north of the mouth of the Buffels River.

The De Beers discussions, if successful, will give Trans Hex much needed new impetus in SA. In August Trans Hex pulled out of a potential joint venture with Kimberley Consolidated Mines (KCM) in respect of its Carter Block concessions in the Northern Cape.

Trans Hex recently indicated that production at Baken, where a number of operational issues have been addressed, touched 72 000 carats (forming the bulk of the group’s total 107 000 SA carat production).

Indications are that this figure should increase in the financial year ahead, and Trans Hex will surely be keen to complement this with additional production from De Beers’ Namaqualand mines. The Namaqualand mines produce more than 300 000 carats annually.

It would seem, however, that De Beers discussions with Trans Hex were borne out of frustration – which, in the corporate world can sometimes be a bad thing.

Authoritative mining website Miningmx reports that De Beers’ might have been frustrated with the slow progress being made with the restructuring of the Alexkor diamond operation.

Apparently 18 months ago De Beers offered to give a 20% stake in the Namaqualand division free of charge to the South African government. This was to promote a merger with Alexkor, which is now owned by the Richtersveld community.

According to Miningmx, the whole process has been ‘fraught with trauma’ because of the in-fighting between the government and the Richtersveld community, as well as government departmental inefficiency.

In light of this CBN wonders whether De Beers’ efforts to engage Trans Hex on an exclusive basis might not prompt Alexkor into belated action.

That could make for some really interesting proceedings – with Trans Hex probably able to recall vividly having Ocean Diamond Mining Holdings snatched away by Namco in the late nineties.

Last year De Beers indicated a willingness to introduce a mining company with empowerment credentials to its Namaqualand Mines as a part of a vision of consolidating West Coast diamond mining assets.

Miningmx reported that De Beers reiterated that the offer of 20% of the Namaqualand division to the government remained open.

What was probably meant is that Trans Hex, which has Tokyo Sexwale’s Mvelaphanda Resources as an empowerment partner, could still pursue an offer of 20% of the Namaqualand mines to government and ultimately Alexkor.

Perhaps offering a 20% stake in an enlarged mining entity (with the Angolan operations billed as a future attraction) would make for an even more enticing arrangement for Alexkor.